Storm in a teacup?: IntraFish report that the EU have stumbled into a treacherous quagmire of problems as a result of the current safeguard investigation. Not only will the EU have to notify the WTO if they impose any safeguard measures against countries importing salmon into Europe, but it would also become an issue for all WTO members. According to both EU and WTO regulations, safeguard measures can only be implemented if an unexpected development has occurred.
In the case of salmon, we at Callander McDowell, would argue that the growth of salmon imports is anything, but unexpected. The decline in supplies of wild caught marine species together with the increased availability of salmon, which can be farmed cheaply, has fuelled imports. The EU industry has been unable to meet this demand and hence the European market has become increasingly reliant on imported fish. This demand has increased steadily over the last decade and so have imports. There certainly has been nothing unexpected about this trend.
Fishupdate.com report that the preliminary findings from the investigation have shown that there has been a major escalation of salmon imports and that this has adversely affected EU producers. This was also not unexpected. It was both predictable and inevitable that as soon as the artificial shackles of the EU salmon agreement were removed that there would be an increase in imports. The agreement had only been put in place because of similar Scottish complaints during 1996 so whilst the Scots could argue that the Norwegians are responsible for the recurring market disruption, it could also be said that the exact same disruption has been brought about by the artificial manipulation of the market caused by these repeated complaints. In fact, it could be said that more damage has been caused to the European salmon market by the repeated complaints to Brussels than by any amount of imported salmon.
Dumping and safeguard cases are usually made against those countries where labour and other costs are very cheap. In the case of Norway, this is not the case. If anything, Norway can be extremely expensive. In addition, Norway is a near neighbour who if they decided, could actually be a member of the EU. If Scottish producers were to consider such a scenario, then what would be their response to the current situation? The answer is that they would have no recourse in Brussels at all and would have to find ways to become more competitive for themselves. Perhaps, this is the real solution, and not the one in Brussels. At least it would give Brussels a way out from the quagmire ahead.
Second chance or same old story?: Karol Rzepkowski, star of the recent BBC Money Programme documentary about cod farming told IntraFish that the whole of the aquaculture industry should look at farmed cod as a second chance. Certainly, the BBC documentary gave the impression that the move to cod production was a way in which farmers could avoid the problems of the salmon industry. The way in which they highlighted diseases, low prices and adverse publicity suggested that salmon farming was now in terminal decline, but this is about as far from the truth as they could get. For example, the programme stated that the number of salmon farms in Scotland has fallen by half, but failed to mention that whilst the number of farms has fallen, production continues to reach record levels to meet the growing demand for value for money salmon.
The programme also highlighted the problems caused by the falling price of farmed salmon which they suggested was due to a glut of fish originating from some of the large multi-national companies. Of course, the programme looked at the rapidly expanding Norwegian cod farming industry as the source of future potential competition, which shows that there’s nothing new there then!.
Mr Rzepkowski cited the public relations problems facing salmon and said that his company had reached out to some of the most respected groups in the environmental community to advise them, however, this didn’t stop Don Staniford from arguing on the TV programme that cod was likely to be a similar environmental disaster as with salmon.
We, at Callander McDowell, have previously argued that cod farming should not be used as a way to escape the problems of the salmon industry. Instead, farmers should only invest in cod if they firmly believe that there is a sound commercial reason for doing so; i.e. that they can profitably produce the cod that the market wants. Cod farming should not be viewed as a second chance because it is not. Cod farmers are just as likely to experience the problems of the salmon industry because they are simply starting a new production cycle with a different species. However hard they try, they will still be accused of causing environmental problems, they will still be prone to disease outbreaks and most importantly, as production expands, they will be unable to stop prices falling.
Mr Rzepkowski may be able to avoid some of these problems by adopting an organic approach and so developing a specialised niche market in much the same way that Loch Duart have for salmon. Unfortunately, this approach cannot be used by every potential cod farmer because the market for high price organic farmed cod is likely to remain small. The bulk of new cod farmers will have to look for ways to reduce production costs in order to maintain profitability. We have yet to see whether this can be achieved.
However at present, the fledgling cod farming industry believes that it will be able to command a high price for their fish. Whilst, Mr Rzepkowski has pinned his hopes on organic cod, other farmers believe that farmed cod will be of higher quality than comparable wild caught fish. Much of this improvement will be due to the reduced time between harvest and when it reaches the market. Wild caught fish often spend a great deal of time on ice whilst the fishing vessels continues its catch and the returns to harbour. Farmers hope that they will be able to get their fish quicker to market and hence retain a much higher quality. It is hoped that this will translate into higher prices for farmed cod.
IntraFish reported on a survey conducted by the Norwegian Institute of Fisheries and Aquaculture Research (Fiskeriforskning) and the Netherlands Institute for Fisheries Research (RIVO) in which consumers tasted both wild and farmed cod.
Twelve hundred consumers were asked to taste cod fillet provided in packs similar to those found in supermarkets. The labels carried varying amount of information in different tests in order to see whether improved awareness of the product influenced the outcome of the tests.
When consumers did not have any information as to the cod they were eating, they thought that farmed cod tasted as good as wild cod but when they knew that one sample was farmed, they judged it to be of inferior quality to the wild fish. The researchers found that even when the label carried a statement that the farmed fish is fresher than wild, consumers still found it to be a poorer product than wild cod.
Sadly, this research seems to suggest that consumers perceive that the ‘farmed’ product is not as good as it’s wild counterpart. This is not surprising since farmed produce is after all farmed growing up in an artificial environment consuming artificial food. This does not mean it is bad but simply that consumers do perceive a difference. The problem for the cod farming industry may well be that this difference is something for which consumers are unwilling to have to dig deeper in their pockets to buy. Most consumers will be happy to buy farmed cod just as they do with farmed trout or salmon, but it must be priced in accordance with it’s position in the marketplace. This may not be that hoped for. We can only hope that any difference between the aspirations of the farmer and the expectation of the consumer do not cause similar market disruption to that affecting salmon. In this at least, cod farmers do have a chance to learn from the experiences of salmon farming, but they will only have one chance and not a second one.